Shortly after today’s open, the S&P 500 was down nearly 2% and off its recent all-time high by 3.5%. But soon the robo-machines and day traders were buying the “dip” having apparently once again gotten the “all-clear” signal.
Don’t believe it for a second! The global financial system is literally booby-trapped with accidents waiting to happen owing to six consecutive years of massive money printing by nearly every central bank in the world.
Over that span, the collective balance sheet of the major central banks has soared by nearly $11 trillion, meaning that honest price discovery has been virtually destroyed. This massive “bid” for existing financial assets based on credit confected from thin air drove long-term bond yields to rock bottom levels not seen in 600 years since the Black Plague; and pinned money market costs at zero—-for 73 months running.
What is the consequence of this drastic financial repression along the entire yield curve? The answer is bond prices which keep rising regardless of credit risk, inflation or taxes; and rampant carry trade speculation that can’t get out of its own way because central banks have made the financial gamblers’ cost of goods—the “funding” cost of their trades—-essentially zero.
This commentary by David showed up on his Internet site yesterday sometime---and today's first offering is courtesy of Roy Stephens. It's worth skimming.
You will pardon us if we don't "buy" the latest attempt by the Census Department to telegraph housing euphoria with the just reported number of 481K new December home sales, a surge of 11.6% compared to November, an increase which was expected by the consensus to be only 2.7%. In fact, the 481K print is now the "highest" since June of 2008.
The reason for our disbelief? Because as we have been tracking for the past 6, and now 7 months, every single such euphoric print since May of 2014 has been revised substantially lower after the fact (and after the headline-scanning algos promptly gobbled up stocks on the initial "beat"), and sure enough, the November print of 438K, was also just "revised" downward to 431K.
Putting today's "highest in 7 years" new home sales print in context: consider that in May 2014 the same data series was originally reported at 504K... only to be revised to 458K!
This real estate-related article put in an appearance on the Zero Hedge website at 10:17 a.m. EST on Tuesday morning---and I thank Manitoba reader U.M. for her first contribution to today's column.
IBM doesn’t like me. After my column last week predicting massive cuts at the giant computer company, IBM now says I’m wrong, and that there will be nowhere near 110,000 IBM employees laid off. But like my young sons who never hit each other but instead push, slap, graze, or brush, I think IBM is dissembling, fixating on the term 110,000 layoffs which, by the way, I never used. Whatever the word, what counts is how many fewer people will be paid by IBM on March 1 compared to today.
The company has a bad year, so what do you do? Throw a large number of employees under the bus. By any measure this will be a big staff reduction.
Another source told me the plan was to give the people notice before January 28th so they would be off the books by the end of February — one month. That implies a lot of firings, offshore staff reductions, contractors released or strongly motivated early retirements. None of those are layoffs. There will probably be lots of normal layoffs, too, with the required notice. I’m told that senior managers throughout IBM have been pleading for the last few months with higher-up executives not to go through with this because of the risk of consequences such as IBM “breaking” accounts or failing to meet contract obligations. IBM’s customers are going to be the biggest casualty to this week’s staff reductions. That is the message IBM is likely trying to avoid.
This article appeared on the forbes.com Internet site late on Monday afternoon EST---and I found it in yesterday's edition of the King Report. It's not overly long, but certainly worth your while.
The middle class that President Obama identified in his State of the Union speech last week as the foundation of the American economy has been shrinking for almost half a century.
In the late 1960s, more than half of the households in the United States were squarely in the middle, earning, in today’s dollars, $35,000 to $100,000 a year. Few people noticed or cared as the size of that group began to fall, because the shift was primarily caused by more Americans climbing the economic ladder into upper-income brackets.
But since 2000, the middle-class share of households has continued to narrow, the main reason being that more people have fallen to the bottom. At the same time, fewer of those in this group fit the traditional image of a married couple with children at home, a gap increasingly filled by the elderly.
This social upheaval helps explain why the president focused on reviving the middle class, offering a raft of proposals squarely aimed at concerns like paying for a college education, taking parental leave, affording child care and buying a home.
This longish commentary put in an appearance on The New York Times website on Sunday---and it's another article I found in yesterday's edition of the King Report.
JPMorgan Chase & Co.’s foreign-exchange traders reaped a gain of as much as $300 million after the Swiss central bank roiled markets by abolishing its cap on the franc, according to two people with knowledge of the matter.
The bank netted $250 million to $300 million on the day of the Swiss National Bank’s surprise decision to scrap the franc ceiling of 1.20 against the euro, said the people, who asked not to be identified because they weren’t authorized to speak publicly. A JPMorgan spokesman declined to comment.
The SNB’s surprise decision on Jan. 15 to remove the three-year-old cap sent the franc soaring as much as 41 percent against the euro that day. JPMorgan is one of the few to emerge from the turmoil with a profit. Citigroup Inc., Deutsche Bank AG and Barclays Plc suffered about $400 million in cumulative trading losses, people with knowledge of the matter have said.
This Bloomberg news item, filed from London, appeared on their website at 1:28 p.m. Denver time yesterday afternoon---and I found it embedded in a GATA release.
Just weeks ago, SPIEGEL published the source code of an NSA malware program known internally as QWERTY. Now, experts have found that it is none other than the notorious trojan Regin, used in dozens of cyber attacks around the world.
Earlier this month, SPIEGEL International published an article based on the trove of documents made available by whistleblower Edward Snowden describing the increasingly complex digital weapons being developed by intelligence services in the US and elsewhere. Concurrently, several documents were published as well as the source code of a sample malware program called QWERTY found in the Snowden archive.
For most readers, that source code was little more than 11 pages of impenetrable columns of seemingly random characters. But experts with the Russian IT security company Kaspersky compared the code with malware programs they have on file. What they found were clear similarities with an elaborate cyber-weapon that has been making international headlines since November of last year.
Last fall, Kaspersky and the U.S. security company Symantec both reported for the first time the discovery of a cyber-weapon system which they christened "Regin". According to Kaspersky, the malware had already been in circulation for 10 years and had been deployed against targets in at least 14 countries, including Germany, Belgium and Brazil but also India and Indonesia.
This short but interesting essay appeared on the German website spiegel.de at 1:21 p.m. Europe time on their Tuesday afternoon---and it's the second contribution of the day from Roy Stephens.
A White House radar system designed to detect flying objects like planes, missiles and large drones failed to pick up a small drone that crashed into a tree on the South Lawn early Monday morning, according to law enforcement officials. The crash raised questions about whether the Secret Service could bring down a similar object if it endangered President Obama.
The drone, which was about two feet in diameter and weighed about two pounds, was operated by a government employee whom the Secret Service did not identify. The agency said the employee was flying the object near the White House around 3 a.m. for recreational purposes when he lost control of it. Officials did not explain why the man, who does not work at the White House and who has not been charged with a crime, was flying the drone at that hour.
The crash was the latest security breach showing the difficulties the Secret Service has had protecting the White House in recent years. In September, a man with a knife climbed over the White House fence and made it deep inside the building before officers tackled him. In 2011, a gunman fired shots that hit the White House while one of the Obama daughters was home.
These drones are going to revolutionize everything---bad and good. This story found a home over at The New York Times website on Monday sometime---and once again I thank Roy Stephens for sending it our way.
The Financial Conduct Authority (FCA) has come under fire for delaying the release of a report into the crisis rescue of Halifax Bank of Scotland (HBOS) until after the general election in May.
Senior Labour politicians, bankers and financial regulators are expected to receive damning criticism for their role in the bank’s near-crash in 2008.
Originally scheduled for publication in April 2013, the deadline was pushed back to the end of 2013 last summer and is now unlikely to be published until September at the earliest.
Business Secretary Vince Cable attacked the delay, saying the employees who lost their jobs as a result of irresponsible management at HBOS deserve better.
This Russia Today news item appeared on their website at 3:41 p.m. Moscow time on their Tuesday afternoon, which was 7:41 a.m. in New York---Moscow time minus 8 hours. It's the second story in a row from Roy Stephens. It's worth reading.
Central banks around the world have teamed up to fleece the public for centuries. Last week, the Swiss National Bank broke rank by not only lying to the public - but by lying to their Central Banking cohorts.
This bite-sized video clip from Mike only lasts for 1:06 minutes, but it's a must watch. It was posted on the youtube.com Internet site early yesterday morning in North America.
Last year Austria's largest bank, Erste Bank, sent shudders of Credit Anstalt through the European Banking System. This year it is Austria's 3rd largest bank that is scaring investors senseless. On the heels of the Swiss National Bank's decision to un-peg from the Euro, Raiffeisen Bank's Swiss-Franc-Denominated mortgage worries have resurfaced (along with Russian/Ukraine write downs) and nowhere is that more evident than the total collapse of the bank's bonds (from over 95c to 65c today).
Even after the ECB Q€ (and some apparent intervention to weaken the Swissy) bonds kept free-falling. Perhaps, the Freedom Party's demands for a bailout will grow louder as the contagion concerns across Europe's banking system explode...
As Bloomberg reports, Raiffeisen had a total of €4.3 billion of Swiss franc loans outstanding as of September 2014, according to estimates by Moody’s Investors Service.
The plunge appears focused on the potential capital shortfalls and talk of the bank selling its Russian unit - both have been denied...
This worthwhile read appeared on the Zero Hedge website at 11:29 a.m. EST on Tuesday morning---and my thanks got out to reader U.M. for sharing it with us.
Last week we wrote in the context of Swiss franc denominated loans to consumers in Europe:
“Another problem is that governments may react to the situation by shifting the losses suffered by mortgage debtors back to the banks – this has e.g. already happened in Hungary. Not surprisingly, this policy has been hugely popular with the country’s population, but very costly for the banks. Since the necessary write-downs have already been taken, no further damage is to be expected from CHF mortgages outstanding in Hungary – the main danger for the banks is rather that the governments of other countries may consider adopting similar policies.”
It didn’t take long for a government to get in on the act. Poland’s government faces elections this year (both presidential and parliamentary), which is likely a major motivation for considering going down Hungary’s path with respect to CHF denominated consumer loans. It presumably hasn’t escaped the attention of Poland’s government that Viktor Orban’s Fidesz party has been faring rather well in Hungarian elections. Hence Polish prime minister Ewa Kopacz informed a throng of potential voters up to their eyeballs in CFH denominated debt that she would seek to move their losses to the banks.
This very interesting article showed up on the acting-man.com Internet site yesterday sometime---and I thank Roy for sliding it into my in-box late yesterday evening Mountain Standard Time.
1. Greece’s New Finance Minister Says Euro Is Like Hotel California: Bloomberg 2. Greek coalition braces for debt showdown as Germany rattles sabre: The Telegraph 3. Greek PM Alexis Tsipras appoints radical economist to new government: The Guardian 4. Greece's New FinMin Explains "This is What Happens When You Humiliate a Nation and Give It No Hope": Zero Hedge 5. E.U. hints at more time, but no Greek write-offs : EU Observer 6. Greece at the Crossroads: The Oligarchs Blew It: Zero Hedge 7. Germany's top institutes push 'Grexit' plans as showdown escalates: The Telegraph
Note: The 'thought police' at Bloomberg have given us a new title to story #1. It's now headlined "New Greek Finance Minister Takes His Default Show on the Road".
[The above stories are courtesy of Roy Stephens, South African reader B.V., reader M.A.---and Casey Research's own Marin Katusa]
The new far-left government in Greece dropped a bombshell on its first day in office by abjuring an E.U. statement on Russia.
It said in a press communique on Tuesday (27 January): “the aforementioned statement was released without the prescribed procedure to obtain consent by the member states and particularly without ensuring the consent of Greece”.
“In this context, it is underlined that Greece does not consent to this statement”.
It added that its new PM, Alexis Tsipras, expressed “discontent” in a phone call to E.U. foreign relations chief Federica Mogherini.
This news item, filed from Brussels, was posted on the euobserver.com Internet site at 6:52 p.m. Europe time on their Tuesday evening---and it's another contribution from Roy Stephens. It's worth reading.
The International Monetary Fund will assist Ukraine only after the situation inside the country is stabilized. The IMF Executive Director Christine Lagarde made this announcement in a Monday interview with Le Monde.
In her words, IMF experts assumed that the conflict would be over by the winter when determining the financial support plan. “Now we are developing new variants, including giving Ukraine four years to implement reforms”, clarified Lagarde.
She also said that the level of financing will “probably be somewhat higher than anticipated,” but that will depend on military-political factors. Lagarde underscored that all IMF plans assume the stabilization of situation in Ukraine. “That is the priority. The linkage between economic and military situation is self-evident,” said Lagarde.
To translate into human language, THEY WILL NOT GIVE KIEV ANY MONEY (as if there were any doubts). That means the situation will develop rapidly and toward the rapid deterioration of the internal situation and toward an COUP D’ETAT of one sort or another. It’s only a matter of time (give or take a month). But this time it won’t be the usual standing around on a square, but a swift and short clash of armed men or a CAPITULATION without a fight (which cannot be ruled out, since it would be preferable to Poroshenko, but I’m sure the Kremlin would not like that, therefore we’re still waiting).
This brief, but absolute must read commentary, especially for all serious students of the New Great Game, put in an appearance on the fortruss.blogspot.ca website yesterday---and it is, of course, courtesy of Roy Stephens once again.
The decision to cut the status of Russian government debt to “junk” on Monday was politically motivated, Vladimir Putin has said.
Standard and Poor’s (S&P), a ratings agency, slashed the rating it holds on Russian sovereign debt from BBB- to BB+, taking it below investment grade status for the first time in a decade.
A prolonged oil price slump and heavy sanctions over tensions in Ukraine have weighed heavily on the Russian economy. The rouble has slid by close to 49pc against the dollar since the beginning of 2014 as a result. More sanctions may soon be deployed, making things harder still.
S&P said: “The reason for the deviation is a significant change in our perception of Russia’s monetary flexibility.” The downgrade in part reflected “the effect we expect Russia’s weakening economy to have on its financial system,” the agency continued.
Putin is right. Politics is the only reason. This item showed up on the telegraph.co.uk Internet site at 3:53 p.m. GMT yesterday afternoon---and it was in my in-box six minutes later at 8:59 a.m. MST, courtesy of Roy Stephens.
The Russian president has blasted attempts to rewrite the history of WWII and hide the crimes of Nazism as inadmissible and immoral, adding that people who do this often try to distract attention from their nations’ collaboration with Hitler.
“It is hard to imagine that real ‘death factories,’ mass executions and deportations have become a terrible reality of the 20th century, that they were cold-bloodedly and thriftily organized in Europe that seemed to be civilized back then,” Vladimir Putin said as he spoke in the Jewish Museum and Tolerance Center in Moscow at the event dedicated to the 70th anniversary of Auschwitz’s liberation.
“Direct attempts to silence history, to distort and rewrite history are inadmissible and immoral. Behind these attempts often lies the desire to hide one’s own disgrace, the disgrace of cowardice, hypocrisy and treachery, the intent to justify the direct or indirect collaboration with Nazism,” the Russian leader stated.
This very interesting article was posted on the Russia Today website at 2:51 p.m. Moscow time on their Tuesday afternoon---and the stories from Roy just keep on coming.
Russia’s response to a possible cut-off from the SWIFT international banking payment system will be “unrestricted,” Prime Minister Dmitry Medvedev vowed. The West is pushing for hitting Moscow with more sanctions as the Ukraine crisis deteriorates.
"We will see what happens, but of course if such decisions are made, I want to note that our economic reaction and generally any other reaction will be unrestricted," the Russian prime minister said on Tuesday, calling on the government to “work out concrete decisions which would help our economy in those conditions.”
Calls to disconnect Russian banks from the global interbank SWIFT system came amid the deterioration of relations between Russia and the West, and the introduction of sanctions in response to Moscow’s alleged role in the Ukraine conflict.
Thus, last August the UK proposed to exclude Russia from the SWIFT system as a part of sanctions imposed on the country due to the situation in eastern Ukraine.
This article, also courtesy of the Russia Today Internet site, showed up there at 8:31 p.m. yesterday evening Moscow time, which was 12:31 p.m. EST.
Iran and Russia plan to create a joint account for national currency trade, Iranian Ambassador to Russia Mehdi Sanaei told RIA Novosti in an interview on Tuesday.
“Both sides plan to create a joint bank, or joint account, so that payments may be made in rubles and rials and there is an agreement to create a working group [for this],” Sanaei said.
The Iranian ambassador added that relations between Moscow and Tehran “are actively developing” and that 2014 was “a very fruitful year” for both countries.
He also said that Tehran expects to sign a contract or memorandum of mutual understanding in 2015 with the Eurasian Economic Union to begin exports to Russia.
This story from the sputniknews.com Internet site, found a home over at the Tehran Times early yesterday evening local time---and I thank Roy Stephens for sending it.
No one in Western corporate media will tell you why U.S. President Barack Obama is hitting Riyadh with a high-powered delegation to “pay his respects” to the new House of Saud potentate, King Salman.
Talk about a who’s who – including CIA head John Brennan; General Lloyd Austin, head of U.S. Centcom; Secretary of State John Kerry; leading House Democrat Nancy Pelosi; and even senile Senator John “Bomb Iran” McCain.
It must have been heart wrenching for most in this crowd to skip a visit to the Taj Mahal in India so they would be part of the last-minute, “unscheduled” stop in Riyadh.
This is how the astonishing mediocrity that doubles as U.S. Deputy National Security Adviser Ben Rhodes, spun it; “Principally, I think this is to mark this transition in leadership and to pay respects to the family and to the people of Saudi Arabia, but I’m sure that while we’re there they’ll touch on some of the leading issues where we cooperate very closely with Saudi Arabia.”
The White House and the Pentagon did not bother to “pay their respects” in person to the people of France after the Charlie Hebdo massacre. The House of Saud – “our” top bastards in the Persian Gulf – is of course much more valuable.
Pepe pulls no punches in this essay posted over at the Russia Today website at 3:45 p.m. Moscow time yesterday afternoon---and it falls into the absolute must read category. It's also the final offering of the day from Roy Stephens---and I thank him on your behalf.
Russia extended its buying spree of gold to a ninth straight month, and the price of gold rose for the first time in five months, data from the International Monetary Fund showed today.
The global financial institution later confirmed that the Netherlands did not increase its bullion holdings in December, contrary to the IMF's earlier report that the bank had raised gold holdings for the first time in 16 years.
The Dutch central bank, the world's ninth-biggest official sector gold holder, has kept its holdings unchanged since late 2008. The bank earlier on Tuesday denied that it bought more gold last year.
This corrected Reuters story, filed from Singapore, appeared on their website at 11:48 a.m. EST yesterday morning---and I borrowed it from the gata.org Internet site, but the first reader through the door with this news on Tuesday morning was reader U.M.
Germany’s financial regulator BaFin has found no evidence to support allegations of manipulation in the gold market or that currency exchange rates were systematically rigged, according to its head of banking supervision.
Raimund Roeseler also said the watchdog is close to concluding a probe into alleged attempts to rig the London Interbank Offered Rate, a benchmark for borrowing costs. He didn’t comment on the results of that investigation.
The probe into currency markets is still under way, he said. Roeseler spoke to Handelsblatt newspaper in an interview published in Frankfurt Monday. Oliver Struck, a spokesman for BaFin, confirmed the comments in an e-mail to Bloomberg News.
Banks worldwide have paid billions of dollars in fines as regulators probe allegations traders sought to profit by manipulating currency and commodity markets as well as benchmark interest rates.
As I've been saying for years---and nobody is paying attention---it's not and has never been the London p.m. gold fix that's the issue, it's the London bias between the London open and the London p.m. fix that's been the root of all evil since January 1, 1975. I explained all this at the Casey conference in San Antonio last September---charts and all. This Bloomberg gold-related news item, filed from Frankfurt, appeared on their Internet site at 12:34 p.m. MST yesterday. I thank reader U.M. for digging this story up on our behalf.
Gold shipments to China from Hong Kong fell 32 percent in 2014 from a record a year earlier as lower prices failed to boost the purchases of bars, coins and jewelry amid a clampdown on corruption and an economic slowdown.
Net imports by mainland China were 750 metric tons last year, down from 2013 when shipments more than doubled to 1,108.8 tons, according to calculations by Bloomberg News based on data from the Hong Kong Census and Statistics Department. Imports in December fell 36 percent from the same month last year, according to the figures, which deduct flows from China into Hong Kong.
Demand for luxury goods including bullion has been hurt by an anti-graft drive in China, while volatility that sank to a four-year low and a rally in stock markets damped interest in the metal as an investment. The buying frenzy that helped push China’s consumption above India’s after prices dropped into a bear market in 2013 hasn’t been sustained, leading banks including Goldman Sachs Group Inc. to predict further declines.
Well, if you're looking for anti-gold propaganda, this bulls hit piece fills the bill nicely. Of course gold imports to China through Hong Kong are declining, as they really cut back on their imports through that portal earlier in the year, as they're now doing most if without publicity through Shanghai and Beijing. That started changing several months back---but imports through Hong Kong to China are nowhere near back to normal---and most eyes are now focused on the weekly withdrawals from the Shanghai Gold Exchange. This gold-related news item, if you wish to dignify it with that name, was filed from Singapore---and appeared on the Bloomberg website at 3:08 a.m. Denver time yesterday morning---and it's also courtesy of reader U.M.
This 25-minute audio interview with the "good doctor" was conducted on Sunday afternoon on all-talk radio WAAM 1600 out of Ann Arbor, Michigan. It was posted on the davejanda.com Internet site on Monday, but I decided to save it for today's column, as it would have got lost in Tuesday's missive.
With government bond yields negative in Switzerland and parts of Europe, gold looks attractive by comparison, bond trader Jeffrey Gundlach of Doubleline Capital said in a television interview Tuesday.
The yield on 10-year Swiss debt turned negative earlier this month, and yields on a number of shorter-dated eurozone government bonds have also been in negative territory, meaning investors are effectively paying governments for the privilege of holding their paper.
“Amazingly, people are paying Switzerland to warehouse their money for 10 years...That makes gold a high-yielder, because it yields zero,” Gundlach quipped in an interview with CNBC. “So you’re in a world that is being incrementally favorable for gold.”
And with volatility in the currency market rising, gold is likely to continue rising “in the months to come,” he said.
This story appeared on the marketwatch.com Internet site at 1:13 p.m. EST yesterday afternoon---and the 3:10 minute CNBC video clip is linked in the article. I thank Manitoba reader U.M. for her final contribution in today's column---and it's worth your while.
Thanks to a new round of funding, the music app is now part of a growing list of technology companies that investors believe are worth at least $1 billion even though they're unprofitable.
While making money may not be the most important factor for young companies, the lofty price tag placed on businesses stuck in the red is raising some eyebrows.
"Markets are not necessarily rationale. This may almost be like a fever," said Roger Kay, a tech analyst at Endpoint Technologies.
It's yet another consequence of extremely easy money from central banks: Investors have little choice but to make riskier and riskier bets.
That's exactly right, dear reader. This article appeared on the cnn.com Internet site on Friday morning EST---and I thank reader U.D. for passing it around on Saturday.
U.S. housing activity remains weak despite six years of federal government aid, strong interest from overseas buyers, rock-bottom interest rates and massive purchases of mortgage bonds by the Federal Reserve.
Does this mean housing may never spring back to its pre-recession levels? Many signs point to yes.
Don't blame the Chinese, who are showing an abundance of interest. Their share of foreign purchases leaped to 16 percent in the year ending March 2014, from 5 percent in 2007.
They paid a median price of $523,148, higher than any other nationality and more than double the $199,575 median price of all houses sold.
This item showed up on the newsmax.com Internet site last Friday as well---and it's courtesy of West Virginia reader Elliot Simon.
This 2:40 minute Bloomberg video clip appeared on their website yesterday I guess, as there's no dateline on the web page. I thank reader Ken Hurt for sending it along.
The Governor of the Bank of England has warned markets to brace for possible trouble in 2015 as the US Federal Reserve tightens monetary policy and liquidity evaporates, fearing that the new financial order has yet to face its first real test.
Mark Carney said diverging monetary policies in the US, Britain, Europe, and Japan may set off further currency turbulence and "test capital flows across the global economy, including to emerging markets."
It is the latest sign that officials at Threadneedle Street are worried about the global fall-out from the rising dollar, which poses a mounting threat to companies in the developing world that have borrowed up to $9 trillion in US dollars.
Mr Carney said regulators have cleaned up the banks and tried to prepare for the tectonic shift taking place in the international currency structure but major risks remain.
This story put in an appearance on the telegraph.co.uk Internet site late on Saturday afternoon GMT---and it's the first contribution of the day from South African reader B.V.
While Saudi Arabia lamented the passing of King Abdullah yesterday, Germany was busy burying its last illusions about the European Central Bank.
After a long and valiant struggle, German hopes were finally extinguished that the ECB would change its monetary mind and come back to the Bundesbank way of thinking.
The majority decision by the ECB governing council to buy €1.14 trillion in sovereign bonds has been a a slap in the face for the German establishment.
Lead by the Bundesbank, Germany’s political, media and business leaders had insisted they saw no looming deflationary threat to justify bond-buying. When the ECB proceeded anyway, they dismissed it as “Draghi doping” of weak euro economies.
This right-on-the-money story showed up on the irishtimes.com Internet site in the wee hours of Saturday morning GMT---and it's the second article in a row from reader B.V.
I was going to start out saying yesterday was the saddest day in Europe in 50 years, or something like that, because of the insane and completely nonsensical largesse the ECB permits itself to launch, aimed at once again saving a banking system, but which will not only not help the European people, it will make things even much worse than they already are. Which is also, lest we overlook that ‘detail’, entirely thanks to the ECB/EU/IMF Troika,
I’ve said many times that the EU in its present form should be dismantled tomorrow morning (even though it’s not the same tomorrow morning anymore), and if Draghi’s $1.1 million x million ‘stimulus’ should make anything clear, it’s that the dismantling gets more urgent by the day.
But calling it the saddest day in Europe in 50 years would show far too little respect for the people who died in former Yugoslavia, and in eastern Ukraine. It’s still a very sad day, though. And I was already thinking about that even before I read Theopi Skarlatos’ article for the BBC; that really made me want to cry.
This interesting guest commentary appeared on David Stockman's website on Sunday---and it's the first offering of the day from Roy Stephens.
As always, the CBB is expression of my own views. It is in no way intended as investment advice. My objective is to chronicle history's greatest Credit Bubble and hopefully add some insight along the way.
Let’s return to where we left off in late-December: “Bubble On, Bubble Off.” The thesis remains that the “global government finance Bubble” was pierced in 2014. However, in a world of unprecedented liquidity excess, deflating Bubbles at the “Periphery” further inflate Bubbles at the “Core.” Last year saw faltering Bubbles in the Emerging Markets (EM) and commodities usher in a new King Dollar reign. While the Fed wound down QE, extraordinary measures by the likes of Draghi and Kuroda safeguard the historic boom in global leveraged speculation. Hot money flooded into U.S. securities markets. These trends run unabated in early-2015.
I’m also not backing away from the view that a prolonged experiment in global monetary inflation is “failing spectacularly”. The stakes are just incredibly high – financial, economic, social, geopolitical… Global policymakers refuse to admit their failings. They will not accept the obvious: printing “money” – creating perceived wealth through electronic debit and Credit entries – will not rectify the world’s ills. Indeed, runaway financial Bubbles lie at the heart of an extraordinary array of worsening global maladies. Disastrously, key central banks have coalesced into the stand that monetary measures have not been aggressive enough.
After being M.I.A. for a month, Doug is back in the saddle, but now on his own website creditbubblebulletin.blogspot.ca. As always, his commentaries are must reads---and this one is no exception. I thank Dan Lazicki for tracking Doug down for us.
When Bernd Lange talks about the advantages of a free trade agreement with the U.S., he often cites the example of the VW bus. The hippy favorite has been the target of a 25 percent tariff since 1964, a punitive move after the European Economic Community raised levies on imported chicken, shutting the Americans out of the market. Sales have been hampered for decades as a result. But if the levy were significantly reduced, its price tag would plunge.
Lange is a classic car enthusiast -- and the chair of the European Parliament Committee on International Trade, which focuses on the Transatlantic Trade and Investment Partnership (TTIP) treaty. But despite the possible benefits for Volkswagen, the Social Democrat has had little choice but to emphasize the negative aspects of TTIP during his public appearances. In Europe's leading exporting nation, broad swathes of the population are opposed to the free trade agreement. You can even find anti-TTIP flyers in many churches.
The main sticking point is special rights given to investors, who would be able to challenge countries in special international dispute settlement panels that bypass national courts. It's a pill that even those who believe in the deal are having difficulty swallowing. Some 145,000 European citizens voiced their disapproval in a "public consultation" undertaken by the European Commission, with many expressing fear that U.S. companies might seek to overturn E.U. laws on genetic engineering, environmental protection and food quality.
This news story was posted on the German website spiegel.de at 4:22 p.m. Europe time on their Monday afternoon---and it's definitely worth reading. I thank Roy Stephens for sending it. By the way, the thought police over at the spiegel.de website changed the headline to read "Free Trade Faults: Europeans Fear Wave of Litigation from U.S. Firms".
1. Greek radical left wins election, threatening market turmoil: yahoo.com 2. Alexis Tsipras - Troika Belongs in the Past: greekreporter.com 3. Greece's New FinMin Warns "We Are Going To Destroy The Greek Oligarchy System" : Zero Hedge 4. Yanis Varoufakis: Greece's future finance minister is no extremist: The Telegraph 5. Greece elections: Merkel has lost, hope has won: Russia Today 6. Far-Left Syriza Victory in Greece - Bruises European Markets: Reuters 7. IMF's Lagarde rules out special treatment for Greece: Reuters/Yahoo 8. Greek vote could be only the beginning for debtor states seeking a euro-exit: The Telegraph 9. Syriza’s victory: this is what the politics of hope looks like: The Guardian
Note: There's been a headline change and rewrite of story #6. It now reads "Euro bounces back, global stocks up after Greek vote".
[The above stories are courtesy of Brian Farmer, our man in Greece---Harry Grant, South African reader B.V., Roy Stephens---and Dennis Mong]
Reports of heavy rocket artillery firing on the eastern parts of the city of Mariupol, Ukraine, as well as a statement made by a separatist leader, indicate the potential preparation of an offensive on the city. While this would be a significant escalation and an indicator of Russian intent to push further into Ukraine, potentially forming a much-rumored land connection to the northern border of Crimea, there are also several indicators required for such an offensive that are currently still missing.
The heavy rocket artillery firing has been widely reported, and the death toll has risen to 27. Mariupol has been shelled in the past, notably in early September, but as the cease-fire took effect, separatist forces generally conducted attacks only outside of the city. It is not clear whether this is simply an intensification of relatively static fighting along the front between Russian and pro-Russian forces on the one side, and Ukrainians, or the beginning of a Russian-led offensive to widen the pocket, or the opening move in a broader strategic offensive to link up with Crimea, 200 miles to the west of the pocket.
The widespread use of Grad Multiple Launch Rocket Systems indicates that this is a planned action with significant logistical support that involves extensive use of Russian troops, though Grad fire has been widely used throughout the conflict. There have been indications that Russian forces, including Russian Marines, have moved into the eastern Ukraine pocket controlled by pro-Russian forces, giving the Russians offensive options. Heavy artillery preparations frequently precede Russian attacks, particularly by concentrated MLRS attack. Given the amount of munitions needed to supply concentrated fire, the Russians tend not to use them casually. The presence of Grad missiles indicates the possibility of artillery preparation for a broader offensive.
I'm sure the attacks are real, but I'm always suspicious of anything that comes off the strafor.com Internet site---and you should be as well. This news item appeared there on Saturday. It's courtesy of Roy Stephens.
The Ukrainian government has introduced the state of emergency in the war-torn south-eastern Donetsk and Lugansk Regions, and put all other territories on high alert, Prime Minister Arseny Yatsenyuk announced.
"In accordance with the Ukrainian Code of Civil Protection, the Cabinet of Ministers has adopted a decision to recognize an emergency situation at a state level. The Ukrainian government has decided to impose the state of emergency in the Donetsk and Lugansk Regions," Yatsenyuk is cited as saying by Interfax-Ukraine.
According to the PM, the move is aimed at providing the most efficient coordination of all government agencies in order to ensure civil protection and the safety of the population.
The statement was made after the field meeting of the Cabinet of Ministers, which took place at the headquarters of the State Emergency Service of Ukraine in Kiev on Monday.
This story showed up on the Russia Today Internet site at 1:03 p.m. Moscow time on their Monday afternoon, which was 5:03 a.m. EST. It's also courtesy of Roy Stephens.
Angela Merkel has reportedly offered Russia negotiations on a free trade agreement with the E.U. in exchange for a peace deal in Ukraine.
The German chancellor made the offer at the World Economic Forum in Davos, where she spoke of a free trade area “from Lisbon to Vladivostok”, according to a report in Süddeutsche Zeitung newspaper.
Mrs Merkel said Germany was “ready” to discuss “possibilities of cooperation in a common trade areas”. But she made it clear talks could not start until Russia abides by the Minsk Agreement, the ceasefire agreed in September, which it has so far failed to honour.
Mrs Merkel's vice-chancellor, Sigmar Gabriel, who was also in Davos, spelt out the offer more clearly. “The next step is to discuss a free trade zone,” he said. “We should offer Russia a way out.”
This story appeared on The Telegraph's website on Friday afternoon GMT---and Bill Busser sent it our way on Sunday morning.
Ratings agency S&P said on Monday it had cut Russia's sovereign credit rating to BB+ or below investment grade.
S&P warned in late December that it could deprive Russia of its investment-grade credit rating as soon as mid-January, following a rapid deterioration of the country's monetary flexibility and a weakening economy.
This Reuters piece, filed from Moscow, showed up on their website [via yahoo.com] late on Monday morning EST---and I thank Elliot Simon for sharing it with us.
Propaganda. At its best – a wonderful German pop group of the 1980s who had their biggest hit with a track named ‘Duel’. At its worst – the comments of the new BBG chief Andrew Lack, which put RT in the same category of ‘challenges’ as ISIS.
“We are extremely outraged that the new head of the BBG [U.S. Broadcasting Board of Governors] mentions RT in the same breath as world’s number one terrorist army. We see this as an international scandal and demand an explanation,” says Margarita Simonyan, RT’s editor-in-chief. Anyone who supports genuine pluralism in the international media should be demanding an explanation too.
It would be easy to say that Dr. Joseph Goebbels, the infamous Nazi Minister of Propaganda would be proud of Lack’s comments. But in fact the propaganda war against RT – of which Lack’s comments are only the latest example, actually – ‘out-Goebbels’ Dr Goebbels’.
The reason for these attacks is fear. What is clear is that the success of RT has caused real panic in the ranks of the west’s neo-con/‘liberal interventionist’ elite.
This must read op-edge piece appeared on the Russia Today website early Sunday afternoon Moscow time---and it's another offering from Roy Stephens.
Iran is stopping mutual settlements in dollars with foreign countries and agreements on bilateral swap in new currencies will be signed in the near future, the Central Bank of Iran (CBI) has said.
“In trade exchanges with foreign countries, Iran uses other currencies, including Chinese yuan, euro, Turkish lira, Russian ruble and South Korean won,” Gholamali Kamyab, CBI deputy head, told the Tasnim state news agency.
He added that Iran is considering the possibility of signing bilateral monetary agreements with several countries on the use of other currencies.
This Russia Today article put in an appearance on their Internet site on Saturday afternoon Moscow time---and I thank International Man's senior editor Nick Giambruno for passing it around.
Germany has decided to stop arms exports to Saudi Arabia because of "instability in the region," German daily Bild reported on Sunday.
Weapons orders from Saudi Arabia have either been "rejected, pure and simple," or deferred for further consideration, the newspaper said, adding that the information has not been officially confirmed.
The decision was taken on Wednesday by the national security council, a government body that includes Chancellor Angela Merkel, Vice Chancellor Sigmar Gabriel and seven other ministers, it said.
"According to government sources, the situation in the region is too unstable to ship arms there," added the daily.
This AFP story, filed from Berlin, showed up on the france24.com Internet site on Saturday Europe time---and I thank South African reader B.V. for his final contribution to today's column.
King Abdullah's writ lasted all of 12 hours. Within that period the Sudairis, a rich and politically powerful clan within the House of Saud, which had been weakened by the late king, burst back into prominence. They produced a palace coup in all but name.
Salman moved swiftly to undo the work of his half-brother. He decided not to change his crown prince Megren, who was picked by King Abdullah for him, but he may choose to deal with him later. However, he swiftly appointed another leading figure from the Sudairi clan. Mohammed Bin Nayef, the interior minister is to be his deputy crown prince. It is no secret that Abdullah wanted his son Meteb for that position, but now he is out.
More significantly, Salman, himself a Sudairi, attempted to secure the second generation by giving his 35- year old son Mohammed the powerful fiefdom of the defense ministry. The second post Mohammed got was arguably more important. He is now general secretary of the Royal Court. All these changes were announced before Abdullah was even buried.
The general secretaryship was the position held by the Cardinal Richelieu of Abdullah's royal court, Khalid al-Tuwaijri. It was a lucrative business handed down from father to son and started by Abdul Aziz al Tuwaijri. The Tuwaijris became the king's gatekeepers and no royal audience could be held without their permission, involvement, or knowledge. Tuwaijri was the key player in foreign intrigues -- to subvert the Egyptian revolution, to send in the troops to crush the uprising in Bahrain, to finance ISIL in Syria in the early stages of the civil war along his previous ally Prince Bandar bin Sultan.
This short essay, which is worth reading, appeared on the huffingtonpost.com Internet site on Friday morning EST---and I thank reader Vince Koloski for finding it for us.
After nearly 20 years as de facto ruler of the Kingdom of Saudi Arabia, King Abdullah ibn-Abdulaziz al-Saud died last night at the age of 90. Abdullah, who took power after his predecessor King Fahd suffered a stroke in 1995, ruled as absolute monarch of a country which protected American interests but also sowed strife and extremism throughout the Middle East and the world.
In a statement last night Senator John McCain eulogized Abdullah as “a vocal advocate for peace, speaking out against violence in the Middle East”. John Kerry described the late monarch as “a brave partner in fighting violent extremism” and “a proponent of peace”. Not to be outdone, Vice President Joe Biden released a statement mourning Abdullah and announced that he would be personally leading a presidential delegation to offer condolences on his passing.
It’s not often that the unelected leader of a country which publicly flogs dissidents and beheads people for sorcery wins such glowing praise from American officials. Even more perplexing, perhaps, have been the fawning obituaries in the mainstream press which have faithfully echoed this characterization of Abdullah as a benign and well-intentioned man of peace.
I would bet that this story is pretty close to the mark. It was a guest contribution on David Stockman's website on Saturday---and I thank Roy Stephens for sending it. It's also worth reading if the topic interests you.
The European Central Bank's announcement on Thursday to switch on the money tap shed light on the deflation risk stalking the euro zone and reminded the elites, who are gathering here for the World Economic Forum's (WEF) annual meeting, of the divergence among policies from different central banks.
The European Central Bank (ECB) on Thursday decided to purchase over 1 trillion euros in public and private sector bonds by the fall of 2016 to counter the deflationary risk and possible stagnation.
ECB President Mario Draghi said the purchasing would start in March 2015 with a monthly amount of 60 billion euros (about 69.48 billion U.S. dollars), and was intended to last until the end of September 2016, but would in any case be conducted until the ECB saw a sustained adjustment in the path of inflation which is consistent with its medium-term inflation maintenance target of below, but close to, 2 percent.
Draghi said the decision to kick off the rescue program was made against a backdrop that inflation dynamics continued to be weaker than expected.
This article, which appeared on the news.xinhauanet.com Internet site on Friday, has had headline change since it was posted. It now reads "Policy divergence talked regarding ECB's QE at WEF". It's the second contribution of the day from Bill Busser.
China's gold demand as measured by withdrawals from the Shanghai Gold Exchange for the week ending January 16 were "amazing" at 70 metric tonnes, Bullion Star market analyst and GATA consultant Koos Jansen writes. He adds that it was unusual for China to do so much buying as the gold price was rising.
Jansen's analysis is headlined "Booming SGE withdrawals In Week 2, 2015: 70 Tonnes" and it's posted at the Singapore website bullionstar.com Internet site on Saturday. I found this gold-related story on the gata.org Internet site.
The new year has ushered in a remarkable and unexpected turn of events for gold. It is up significantly in four of the seven top currencies (the euro, British pound, and Australian and Canadian dollars), up respectably in two others (U.S. dollar and Japanese yen), and down slightly in the last (Swiss franc).
These charts and the significant gains in gold's value in a very short time demonstrate amply the value of gold as a hedge, not just against inflation but against sudden currency devaluation and systemic financial and economic risks as well. ...
... Though it appears that gold and quantitative easing might be directly correlated, what is really going on is that both simply are reacting to the same problem -- a bad economy with the potential systemic breakdown, not the prospect of inflation. Central banks respond by printing money. Investors respond by buying gold.
This commentary by Mike appeared on the usagold.com website on Saturday---and I thank Chris Powell for wordsmithing all of the above.
This is another interview I did at the Vancouver Resource Investment Conference last weekend---and if my memory serves me correctly, it runs for a bit over five minutes. I thank Al for taking the time to interview me. It was posted on the kereport.com Internet site on Saturday.
CME Group Inc. started physically delivered kilobar gold futures in Hong Kong as it joins other exchanges vying to establish new price benchmarks in the top user region.
The contract listed on the Comex is tied directly to the price of bullion of 99.99 percent purity in Hong Kong and will be physically delivered to vaults in the special administrative region. CME, owner of the largest futures exchange, said in September that trading may begin in the fourth quarter of 2014.
The Shanghai Gold Exchange started bullion trading in the city’s free-trade zone on Sept. 18 while Singapore Exchange Ltd. began a wholesale kilobar contract on Oct. 13 as more of the world’s gold is processed and used in the region and the 95-year-old fixing benchmark in London gets overhauled. Almost two-thirds of gold jewelry, bars and coins were consumed in Asia in 2013, according to data from the World Gold Council.
“The success of the contract depends if it can get the liquidity,” said Victor Thianpiriya, an analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “Hong Kong is as close to China as you can get without being onshore, so it might appeal to those that don’t have a license to trade onshore. People like to trade the China-London price differential.”
This Bloomberg story, filed from Singapore, appeared on their Internet site just before midnight on Sunday evening---and I thank Manitoba reader U.M. for sending it our way.
The Stock Exchange of Thailand is gearing up for the establishment of the country's first physical gold exchange after major gold dealers agreed to become members of the new spot gold exchange.
Further details about shareholding between the gold dealers and the stock exchange are being discussed, said SET chairman Sathit Limpongpan. The creation of the spot gold market recently hit a snag due to disputes over management and shareholding between the SET and gold dealers, while some traders at the time said that they would refuse to join the new exchange.
Mr Sathit said the Securities and Exchange Commission had also thrown support behind the idea of setting up the spot gold exchange, but its implementation is pending the approval of the Finance Ministry could enact an organic law to allow the market to be priced and settled in major currencies, the US dollar in particular.
This gold-related news item showed up in the business section of the Bangkok Post on Monday morning local time---and it's another item I found on the gata.org Internet site.
India's silver imports in 2014 rose 15 percent from 2013, the most since at least 2009, Bullion Star market analyst and GATA consultant Koos Jansen reports, as investment and jewelry demand shifted from from gold. Jansen adds that Asia is draining Western supplies of silver as well as gold.
His analysis was posted on the bullionstar.com website yesterday---and it's certainly worth reading. I found this silver-related story in a GATA release.
Dmitriy Balkovskiy is a Russian coin dealer in Moscow we’ve interviewed before. Since the ruble’s crash, he’s witnessed some interesting developments in his country, so we asked him for an update.
I would like to expand on Jeff Clark’s piece “Gold Was Up 73% Last Year” with some real-life stories from inside Russia.
First, a small correction… Jeff describes an investor sitting in a Moscow café and reading about gold’s phenomenal rise in rubles in a Russian newspaper. In reality, gold-related info in a Russian newspaper would be buried on page 17 and very difficult to locate. “Serious” gentlemen deal in stocks or real estate; gold coins and bars are for the naïve. In this respect, Russia is no different from the USA, and even worse.
Now to my episodes…
Yesterday's edition of the Casey Daily Dispatch is one of the best ones that has ever crossed my desk---and easily falls into the absolute must read category.
Investors' desire for precious metals is deepening after Mario Draghi's $1.3 trillion pledge drove gold to a five-month high and silver to the brink of a bull market.
Their buying helped boost the value of exchange-traded products backed by gold and silver by $8.94 billion this month, the most since September 2012, data compiled by Bloomberg show. Hedge funds and other speculators in futures are the most bullish on gold in two years and have bet more on silver in all but two weeks since the start of November.
At a time when the price of almost every other commodity is sinking, silver and gold are having their best start to a year in more than three decades. The European Central Bank president's stimulus sent the euro to an 11-year low against the dollar, pushed government bond yields lower and raised the appeal of alternatives to currencies that are being revalued.
"Silver is tied to gold, and they move with trust," David Rosenberg, the Toronto-based chief economist at Gluskin Sheff & Associates, which oversees C$8 billion ($6.4 billion), said Jan. 22. "There's an increasing number of global investors who are starting to lose trust in the world's central banks."
This very interesting Bloomberg story, filed from New York, appeared on their website at 12:28 p.m. Denver time on their Monday afternoon---and the precious metal-related stories from GATA just keep on coming.
The Netherlands added to its gold reserves for the first time since 1998 as the ninth-biggest holder boosted assets to the highest in seven years, while Russia bought for a ninth month, International Monetary Fund data show.
Bullion reserves in the Netherlands climbed to 20 million ounces or 622 metric tons in December, the highest since 2007, after being unchanged at 19.7 million ounces from December 2008 through November, the IMF’s website showed. Russia, with the fifth-biggest hoard, held 38.8 million ounces last month, the most in at least two decades, the data show.
Central banks globally are adding gold to reserves after reducing holdings for about two decades from the late 1980s as they seek to diversify assets, according to Oversea-Chinese Banking Corp. Worldwide purchases would probably be 400 tons to 500 tons in 2014, the World Gold Council said in November. Gold rose for the first time in four months in December as signs of slowing economic growth spurred haven demand.
This short item, co-filed from Singapore and Melbourne, appeared on the businessweek.com Internet site on Tuesday in the Far East---and Manitoba reader U.M. slid it into my in-box just before 3 a.m. EST this morning. It's definitely worth reading.
The picturesque village of Tyndrum in Scotland's Grampian Highlands is bracing itself for what could be a surge of prospectors after it was revealed around £200m of gold is located in local hills.
Gold was excavated from the local Cononish mine by Australian firm Scotgold Resources in the 1990s but the firm suffered financial difficulties when the price of gold plummeted and the mine never opened for business.
Now the price of gold has risen to £850 an ounce, potentially turning the gold mine into a literal lucrative goldmine for the company who estimate there could be 248,000 ounces of gold – twice as much as previously thought.
The purity of the gold has also taken the company by surprise – it is 9% purer than previously thought. That means there could be £200m of gold around the town.
This news item was posted n the ibtimes.co.uk Internet site on Sunday afternoon GMT---and I thank BIG GOLD editor Jeff Clark for digging it up for us.
In the first of a series of articles about the gold vaults of the Federal Reserve Bank of New York, GATA consultant Ronan Manly reports that the bank's documents indicate a huge decline over recent decades in the number of central banks vaulting gold there as well as the amount of gold vaulted.
Further, Manly finds, the bank has gotten much more secretive about its gold vaulting over the years. Manly's study is titled "The Keys to the Gold Vaults at the New York Fed, Part 1" and it was posted on the bullionstar.com Internet site on Friday.
It's another article I found on the gata.org Internet site---and it's on the longish side, but it's definitely worth your while.
Gold and silver are getting another turn in the spotlight, luring investors worried about slowing global growth and surprises by central banks.
On Thursday, the European Central Bank offered the latest reason to pile into precious metals by unleashing a bigger-than-expected bond-buying program amid continued worries about Europe’s economy. Gold futures ended above $1,300 a troy ounce for the first time since August, while silver neared bull-market territory, defined as a 20% increase from a recent low.
Gold and silver are drawing buyers of all stripes, a sign fears about a worsening economic outlook run deep in financial markets. The metals are popular havens for nervous investors but had fallen out of favor after setting price records in 2011 as the U.S. recovery gained speed. Now these metals are luring back some money managers, as collapsing oil prices, fears of a recession in Europe and volatility in currency markets shake their faith in stocks and other investments.
Both metals remain far below their peaks, and many investors are skeptical that economic conditions are dire enough to sustain recent gains. But others make the case that gold and silver look more promising than stocks, which are at or near record highs in many markets, or government bonds, where yields are near zero across the developed world. Some investors also are embracing metals as a store of value in case policies like those announced by the ECB spur inflation.
This gold-related story, posted in the clear, appeared on The Wall Street Journal's website last Thursday evening EST---and I thank Ken Hurt for bringing it to our attention.
We've heard it all: snow, cold weather, hot weather, non one-time recurring, "one-time, non-recurring" charges, and even Bush. But when it comes to "excuses" for why one is wrong, this morning Goldman's note "Central banks stall a more bearish gold outlook" absolutely takes the cake.
That's right: Goldman just blamed central banks for being unable to be "more bearish" on gold.
While readers let that sink in for a bit, here is the gist of Damien Courvalin's note.
Even more monetary stimulus has helped support gold prices…
While gold prices have trended lower since mid-2013, the decline has been short of our expectations. Recently, the combined support of: (1) weaker-than-expected US economic data; (2) the run-up to the announcement of QE in Europe; and (3) the surprise SNB decision to remove the CHF/EUR cap, have seen prices rise to near $1,300/oz. While we believe that these catalysts are now mostly priced in, and that gold prices will decline in 2015-16, we are nonetheless raising our near-term forecast to current prices.
Wait, so infinitely diluting fiat money and paper claims on wealth, a process which inevitably ends up with the para-dropping of bales of cash, is favorable for hard, "traditional" stores of value? Do go on...
This incredible story showed up on the Zero Hedge website at 8:01 a.m. on Monday morning---and I thank Manitoba reader U.M. for her second offering in today's column.
Lenin, the implacable Russian revolutionary, despised gold. He thought it should be used to build public lavatories. I was of much the same persuasion early in my career. The yellow metal's economic utility seemed to me minimal in the light of its declining industrial uses. As an investment it was and remains entirely speculative because it yields no income. And since the introduction of index-linked government bonds, any merits it might have as an inflation hedge have become less relevant.
Certainly gold has been a very erratic store of value in recent decades. Anyone who bought gold at the peak of the gold bull market in the early 1980s saw their investment lose 80 per cent of its value in real terms over the next 20 years. And as a protection against political and economic instability it has latterly become a less reliable bolt-hole, failing to rise in price consistently in response to each new geopolitical crisis.
Yet some years ago I changed my mind about the metal.
The first reason was that gold, over millennia, has never defaulted. Humanity thus harbours a psychological commitment to the yellow metal that would probably take not just decades but centuries of terrible investment returns to unravel. That means it is unlikely to lose all its value in our lifetimes even if its industrial uses finally disappear in their entirely and people lose all interest in gold as jewellery.
Heresy has been committed at the Financial Times! Off with his head, I say! When you see articles like this allowed to surface in the FT, you know it's time to circle the financial and monetary wagons on an international scale. How things have changed in the fifteen years since I got involved with GATA. This Financial Times story from Sunday is posted in the clear in another GATA release. Needless to say, it's very much worth reading.
Hedge fund manager Kyle Bass told CNBC on Friday that falling oil prices are creating a "deflationary environment" that will force the Fed to delay its interest rate increases.
Like many market watchers, the founder of Dallas-based Hayman Capital Management said he had expected the first rate hike to be in June.
"Now maybe you won't. Maybe you'll see it in October or November," Bass said in a "Squawk Box" interview from the World Economic Forum in Davos, Switzerland. "The problem the Fed has now is you have a real kind of deflationary environment because of oil, even though you have close to full employment."
This 4:41 minute CNBC video interview, with transcript, was posted on their website very early Friday morning EST---and today's first news item is courtesy of Ken Hurt.
U.S. Treasury Secretary Jack Lew said today a strong U.S. dollar was good for America and that the robust performance of the U.S. economy was driving movements in currency markets.
His comments supported a long-standing policy of the Treasury that strength in the currency was positive if it reflected economic fundamentals rather than efforts by foreign governments to gain an unfair edge in global trade.
The dollar has surged about 20 percent against its major trading partners since early May. Lew suggested that fundamentals were a factor in its rise.
"The strong dollar, as all of my predecessors have joined me in saying, is a good thing. It's good for America."
But how long the dollar remains this strong is open to debate. This Reuters article, based on a CNBC interview from Davos, appeared on their Internet site at 9:53 a.m. EST yesterday---and I found it embedded in a GATA release.
This 43:17 minute video speech by Richard Duncan was presented in Melbourne, Australia---and it's not often that anything he writes or says appears in the clear. So this is a rare opportunity to hear his thoughts.
It was was posted on the vimeo.com Internet site---and I thank D'Anne Blume for finding it for us on Wednesday.
My humble thesis tonight is that the entire 20th Century was a giant mistake.
And that you can put the blame for this monumental error squarely on Thomas Woodrow Wilson——-a megalomaniacal madman who was the very worst President in American history……..well, except for the last two.
His unforgivable error was to put the United States into the Great War for utterly no good reason of national interest. The European war posed not an iota of threat to the safety and security of the citizens of Lincoln NE, or Worcester MA or Sacramento CA. In that respect, Wilson’s putative defense of “freedom of the seas” and the rights of neutrals was an empty shibboleth; his call to make the world safe for democracy, a preposterous pipe dream.
Actually, his thinly veiled reason for plunging the US into the cauldron of the Great War was to obtain a seat at the peace conference table——so that he could remake the world in response to god’s calling.
But this was a world about which he was blatantly ignorant; a task for which he was temperamentally unsuited; and an utter chimera based on 14 points that were so abstractly devoid of substance as to constitute mental play dough.
This longish commentary appeared on David Stockman's website on Wednesday as well---and is definitely worth reading. It's another article I'd been saving for today---and it's the first contribution of the day from Roy Stephens.
Former U.S. drone sensor operator Brandon Bryant admits he “couldn’t stand” himself for his participation in the country’s drone program for six years – firing on targets whose identities often went unconfirmed.
Since 2001, and increasingly under the Obama administration, the US has been carrying out drone strikes against targets believed to be affiliated with terrorist organizations in countries like Afghanistan, Yemen, Pakistan and Somalia. The program, which has been shrouded in secrecy, has been routinely criticized for the high number of resultant civilian casualties.
Pakistan’s Peshawar High Court ruled in 2013 that the attacks constitute a war crime and violate the UN Universal Declaration on Human Rights. Meanwhile the Obama administration continues to insist that drone warfare is a precise and effective method of combat.
According to data collected by the human rights group Reprieve and published last November, attempts to kill 41 targeted individuals across Pakistan and Yemen resulted in the deaths of some 1,147 people. Often a kill requires multiple strikes, the group noted.
This article appeared on the Russia Today website at 9:06 p.m. Moscow time on their Thursday evening---and it's the second offering in a row from Roy Stephens.
SPIEGEL: Mr. Soufan, during your time as an FBI agent, you spent years conducting interrogations. Now you have also written a book about torture at secret American prisons. Were there any surprises for you in the recently released US Senate Intelligence Committee report on CIA torture?
Soufan: Yes, there were few things I didn't know. That we put prisoners (including Zubaydah) in a big box for a total of 266 hours -- that's 11 days and 2 hours -- and that we simply kept one of our most important prisoners, our only high-value-detainee at the time, in total isolation for 47 days instead of questioning him and gaining important information. As a matter of fact, I didn't know about these things.
SPIEGEL: Were details of the report still shocking to you, even though you had known about the allegations for years?
Soufan: At some point it was difficult for me to read on, especially the passages about the torture of the first important prisoner we interrogated, the terror facilitator Zubaydah. The level of unprofessionalism that the report reveals is incredible. It is really shocking. But I should not be surprised, given that 80 percent of this harsh interrogation program was outsourced to outside contractors who had no clue about interrogations. We left our most important prisoners to amateurs.
This disturbing article appeared on the German website spiegel.de at 4:06 p.m. Europe time yesterday afternoon---and I thank Roy Stephens for his third story in a row in today's column. It now sports a softer headline. It reads "Ex-FBI Official: 'We Left Our Most Important Prisoners to Amateurs'".
More than the usual electricity of Las Vegas air, the skies above CES are buzzing with drones and flying cameras — some tiny, some mighty, some simply smart and others downright brilliant.
Move over selfie stick. The sky (or maybe the convention center ceiling) is the limit at this year’s International Consumer Electronics Show. Flying quadcopters, octocopters and wearable cameras that boomerang back to you — all have one thing in common: they are able to capture every moment like an eye in the sky.
Drones are so ubiquitous at this year’s CES, event organizers sponsored the Game of Drones, where remote-controlled drones faced off in a rowdy game of skyward bumper cars. For the event, participants used the Action Sports Airframe, a drone body design that’s able to resist fire, water and extreme impacts. The resulting carnage of crashes and broken blades.
These are just a few of the drones, cameras and copters buzzing around CES this year, but it’s clear we can expect more in the near future. Ben Wood, senior analyst as CCS Insights said drones, while exceedingly fun, are a magnet for all sorts of privacy and safety issues.
This extremely interesting story, with lots of video clips embedded, appeared on the iq.intel.com Internet site back on Wednesday, January 14---and I forgot to include it in last Saturday's column, so here it is now. I thank Orlando, Florida reader Dennis Mong for sharing it with us.
Whom does FATCA affect?
The short answer is: just about everybody.
At the top of the list are those who carry U.S. indicia (see Part I) and who live outside of the United States.
In Canada these are estimated to represent approximately 3% of the Canadian population. Add to that their spouses and family members with whom they share accounts, and a much larger figure is indicated (perhaps, as has been suggested by some, as great as 12%.)
Publicity about FATCA has served to educate not only “overseas U.S. Persons” about citizenship-based taxation (CBT) and the Foreign Bank Account Report (FBAR), but also those who employ them or otherwise associate with them.
Wow! This amazing article appeared on the internationalman.com Internet site yesterday---and I thank their senior editor, Nick Giambruno for sharing it with us. It's definitely a must read, if it affects you, or anyone you know.
The decision by the European Central Bank to begin €1.14 trillion quantitative easing (QE) program will eventually reinforce inequality within Europe and have serious political consequences, billionaire George Soros told RT in Davos.
“Excessive reliance on monetary policy and attempts to enrich the owners of property will not relieve the downward pressure on wages,” said Soros to a question from RT during a news conference in Davos. He says it’s too early to react to QE measures in Europe, but they will clearly deepen the crisis of trust between the rich and the poor.
The European Central Bank announced Thursday a €1.14 trillion ($1.3 trillion) quantitative easing program from March. The bank will buy government debt by monthly injecting €60 billion in public and private securities. The move is expected to drive inflation to the target of 2 percent and overcome a triple-dip recession in the eurozone.
The anti-poverty charity Oxfam released a report ahead of the Davos meeting this week, warning of the unprecedented economic inequality splitting the world apart.
This Russia Today article appeared on their website at 11:08 a.m. Moscow time on their Friday morning---and I thank Roy Stephens for sending it.
European Central Bank policy makers Benoit Coeure and Ignazio Visco underlined that their new bond-buying program will be extended if it doesn’t show results.
“If we haven’t achieved what we want to achieve,” said Coeure, the ECB’s head of market operations, “then we’ll have to do more, or we have to do it for longer.” Visco, the Italian central-bank governor, said earlier on Friday that “we are open-ended” about asset purchases.
Both men spoke in Bloomberg Television interviews in Davos, where they were among a small coterie of Governing Council members who traveled to the Swiss resort after completing an historic monetary-policy decision in Frankfurt the day before. ECB President Mario Draghi pledged to buy 60 billion euros ($68 billion) a month of assets including government bonds through September 2016, while also committing to do so until officials see “a sustained adjustment in the path of inflation.”
The ECB’s calculations show the program will add 0.4 percentage point to inflation in 2015 and 0.3 percentage point in 2016, according to a euro-area official. Consumer prices fell an annual 0.2 percent in December, compared with the ECB’s medium-term inflation goal of just under 2 percent. Prices probably slid 0.5 percent this month from a year earlier, according to a Bloomberg survey before data due on Jan. 30.
This Bloomberg news item, filed from Frankfurt, appeared on their Internet site at 5:01 p.m. Denver time yesterday afternoon---and I thank Manitoba reader U.M. for finding it for us.
The most dramatic battle yet in the currency wars took place last Thursday. It was the financial equivalent of a Pearl Harbor sneak attack…
“I find it a bit surprising that he did not contact me,” IMF Director Christine Lagarde told CNBC’s Steve Liesman that day, “but, you know, we’ll check on that.”
You can almost imagine the conversation afterwards between Mario Draghi of the European Central Bank (ECB) and Swiss National Bank (SNB) President Thomas Jordan…
Mario Draghi: “Did you tell Christine?”
Thomas Jordan: “I thought you were going to tell her…”
Mario Draghi: “Wait, I thought you were!”
This must read commentary, which includes Jim's comments on gold, appeared on the dailyreckoning.com Internet site on Thursday---and I thank West Virginia reader Elliot Simon for sending it along.
Germany has not modelled a potential Greek exit — the so-called "Grexit" — from the 19-nation eurozone, Germany's finance minister insisted Friday, two days ahead of a Greek election that may bring an anti-bailout party to power in Athens.
"We don't model any exit," Wolfgang Schaeuble said at a panel Friday at the World Economic Forum in the Swiss resort of Davos.
The potential of a "Grexit" has resurfaced ahead of Sunday's election, which opinion polls suggest will see the left-wing Syriza party come first ahead of Prime Minister Antonis Samaras' center-right New Democracy.
While praising Greece's better-than-expected efforts to get its economy in order, Schaeuble warned that Greece won't be allowed to benefit from the European Central Bank's new stimulus program if the government in Athens ditches the reform program required for bailout cash.
This AP story, filed from Davos, was picked up by the news.yahoo.com Internet site early Friday morning EST---and it's the second offering of the day from reader U.M.
Recent events, such as the overthrow of the government in Ukraine, the secession of Crimea and its decision to join the Russian Federation, the subsequent military campaign against civilians in Eastern Ukraine, western sanctions against Russia, and, most recently, the attack on the ruble, have caused a certain phase transition to occur within Russian society, which, I believe, is very poorly, if at all, understood in the west. This lack of understanding puts Europe at a significant disadvantage in being able to negotiate an end to this crisis.
Whereas prior to these events the Russians were rather content to consider themselves “just another European country,” they have now remembered that they are a distinct civilization, with different civilizational roots (Byzantium rather than Rome)—one that has been subject to concerted western efforts to destroy it once or twice a century, be it by Sweden, Poland, France, Germany, or some combination of the above. This has conditioned the Russian character in a specific set of ways which, if not adequately understood, is likely to lead to disaster for Europe and the world.
Lest you think that Byzantium is some minor cultural influence on Russia, it is, in fact, rather key. Byzantine cultural influences, which came along with Orthodox Christianity, first through Crimea (the birthplace of Christianity in Russia), then through the Russian capital Kiev (the same Kiev that is now the capital of Ukraine), allowed Russia to leapfrog across a millennium or so of cultural development. Such influences include the opaque and ponderously bureaucratic nature of Russian governance, which the westerners, who love transparency (if only in others) find so unnerving, along with many other things. Russians sometimes like to call Moscow the Third Rome—third after Rome itself and Constantinople—and this is not an entirely empty claim. But this is not to say that Russian civilization is derivative; yes, it has managed to absorb the entire classical heritage, viewed through a distinctly eastern lens, but its vast northern environment has transformed that heritage into something radically different.
This extremely interesting essay put in an appearance on the cluborlov.blogspot.mx website on Tuesday, January 13---and it's worth reading if you want a quick history lesson on Russia's origins. I thank Tolling Jennings for digging it up for us---and for obvious reasons, had to wait for a spot in my Saturday missive.
Vladimir Putin isn’t just angering leaders from Berlin to Washington. He’s irking some of his richest friends, too, by snubbing their pleas to end the conflict in Ukraine and ostracizing all but a handful of hardliners.
The ruble’s plunge has heightened opposition to Putin’s backing of the rebellion in Ukraine among his wealthiest allies, prompting the president to shrink his inner circle from dozens of confidants to a small group of security officials united by their support for the separatists, two longtime associates said.
Putin is increasingly suspicious of men who owe their wealth to their ties to him and who are being hurt the most by U.S. and European sanctions, according to the people, who spoke on condition of anonymity to avoid reprisal. The 21 most affluent people in the country lost a total of $61 billion last year, a quarter of their combined fortune, according to the Bloomberg Billionaires Index.
Businessmen who have long been close to Putin are “on the periphery now,” said Sergei Markov, a political consultant who helped monitor the referendum in Crimea that led to Russia’s annexation of the peninsula in March.
This longish Bloomberg article, filed from Moscow, should be read with your propaganda meter on it's high gain setting. It was posted on their Internet site at 6:50 a.m. Denver time on Friday morning.
Saudi Arabia’s King Abdullah bin Adbul Aziz died early Friday, setting the stage for a transition of power at a critical moment as the key U.S. ally in the Middle East struggles with falling oil prices and rising Islamist violence.
The monarch, believed to be 90, was succeeded by his brother, Crown Prince Salman, according to state television. That put the region’s most important Sunni power and America’s closest Arab ally in the hands of a 79-year-old who is reportedly in poor health and suffering from dementia.
Salman’s rise to the throne postpones the question of when the Saudi monarchy will turn to the next generation of princes to run their country of 28 million people at a crucial moment in a region mired in crisis.
This in-depth article appeared on The Washington Post's website on Thursday---and is worth reading if the topic interests you, which it should. I thank Casey Research's own Marin Katusa for passing it around yesterday.
Chinese imports of oil from major OPEC countries fell last year, while the purchases of Russian oil saw a record increase, said the Chinese General Administration of Customs. It is part of Chinese plans to diversify its oil sources.
Last year, the share of Saudi oil in the Chinese market fell 8 percent and the volume from Venezuela dropped 11 percent (below 20 million tons), while the share of Russian oil leapt 36 percent, the equivalent to 665,000 barrels a day, General Administration of Customs said Friday in a report.
Saudi Arabia remains China’s largest supplier with 49.67 million tons of exports in 2014, or 997,000 barrels a day, the least since 2010.
This Russia Today story, filed from Moscow, was posted on their Internet site at 4:01 p.m. local time, which was 8:01 a.m. in New York. It's another contribution from reader U.M.
While the United States has been running a speculative attack on the Russian ruble, Russia likely is running a more subtle attack on U.S. dollar hegemony by putting a bid under gold, Doug Pollitt of Pollitt & Co. writes in the Toronto brokerage firm's market letter for January.
Pollitt also notes the complaints of Comex metals traders about "spoof" trades driven by computers, the sort of practice that would have driven human traders from the floor in the old days. With Pollitt's kind permission, his January letter, titled "Vlad in the Machine," is posted in PDF format at GATA's Internet site.
This amazing 7-page article defies description, but it definitely falls into the absolute must read category---and you can come to your own conclusions about it once you're done.
Bullion Star market analyst and GATA consultant Koos Jansen, reviewing U.S. government records showing government officials meeting in secret to plan their secret interventions in the gold and currency markets -- that is, not "conspiracy theory" but conspiracy facts -- joins those observers who are inclined to think that the secret policy of the world's major central banks is to redistribute gold reserves among themselves more fairly. A review of such speculation was dispatched by GATA on Tuesday.
Jansen's commentary is headlined "Will Gold Be Part of a New International Monetary System?" and it's posted at the bullionstar.com Internet site. I stole all of the above from a GATA release, but the first reader through the door with the story yesterday was Dan Lazicki. It's worth reading, as is the link in the previous paragraph.
Listen to Eric Sprott share his views on the ongoing chaos in foreign currency markets, the renewed interest in gold and his short-term outlook for that metal.
This 9:46 minute audio interview was conducted by sprottmoney.com's Geoff Rutherford yesterday.
Central bankers are professors who never worked a day in their lives and whose easy-money policies will ultimately be disastrous for markets, says Marc Faber, publisher of the Gloom, Boom & Doom Report.
That's why he says he thinks gold could be the "trade of the century" and why he recommends additional exposure to gold through junior miners. He explains his investing strategy today on Commodities.
This 7:07 video clip was posted on Canada's Broadcast News Network on Friday---and I thank reader Ken Hurt for his second contribution to today's column. I haven't had the chance to listen to it yet, but will make amends over the weekend.
January 2015 has already been remarkable for the number of Black Swan (unanticipated) events which have hit the markets in such a short space of time. Some of these have been totally unheralded like the Swiss National Bank’s decision to unpeg the Swiss Franc from the Euro – which really did take the markets by surprise – while others may, in hindsight have been a little more predictable. These include the escalation of fighting in Eastern Ukraine as both sides appear to have used a recent ceasefire to boost their military arsenals and prepare for more fighting; the death yesterday of King Abdullah of Saudi Arabia – perhaps predictable in that he was 90 years old and in poor health – but nonetheless promoting new uncertainties in what is a particularly volatile part of the world; the apparent growth in strength of Boko Haram in West Africa which has the potential perhaps to spread to major gold producing areas if the rebel group is unable to be held back; the Charlie Hebdo massacre in Paris which threatens to unleash an anti-Muslim backlash throughout Europe, or stimulate copycat killings by other fanatical fundamentalists. And all this within a three week period! Who knows what else lies in store for us in the remaining 49 weeks that lie ahead?
Gold should thrive on uncertainty in terms of a big rise in safe haven demand – and we already look like having a very uncertain year ahead. Gold may have come back from its recent interim peaks following the SNB decision in particular and the much-heralded announcement of the ECB’s QE programme (although this turned out to be bigger than expected) and it seems to be having difficulty today holding on to the $1,300 level. But this could be just a temporary hiatus. As other geopolitical and economic factors come into play, there could be a huge boost – and that’s just from events which might be seen as predictable. More Black Swans could further upset the applecart that is the global economy and lead to yet another gold price upsurge as a result.
This commentary by Lawrie showed up on his website lawrieongold.com sometime yesterday.
Yesterday the European Central Bank acknowledged that the currency it manages is being sucked into a deflationary vortex. It responded in the usual way with, in effect, a massive devaluation. Eurozone citizens have also responded predictably, by converting their unbacked, make-believe, soon-to-be-worth-a-lot-less paper money into something tangible. They’re bidding gold up dramatically.
So after falling hard in 2013 and treading water for most of 2014, the euro price of gold has gone parabolic in the space of a couple of months. This sudden rather than gradual awakening is the standard pattern for a currency crisis, mainly because it takes a long time for most people to figure out their government is clueless and/or lying. But once they do figure it out, they act quickly.
Europe’s gold chart isn’t as dramatic as Russia’s (see it here) because Europe doesn’t depend on oil exports and the euro, while dropping versus the dollar, isn’t yet in free-fall. But with another trillion euros due to hit the market in the coming year, and a series of currency union-threatening political crises in the pipeline, the flight to safety could easily become a stampede.
This short, but excellent article, along with a couple of terrific charts, appeared on the Zero Hedge Internet site at 8:09 a.m. on Friday morning.
It had been suggested last month that Russia would have to sell some of its gold reserves – the World’s fifth largest national central bank holding (ignoring the IMF’s holding) – to help prop up the ruble. The Russian currency has been being driven down, almost in free fall for a time, by the unholy alliance of drastically falling oil and gas prices coupled with U.S. and European sanctions over the Crimea annexation and possible Russian involvement in the continuing uprising by pro-Russian rebels in Eastern Ukraine.
But, the opposite has been the case. The Russian Central bank announced yesterday that its gold reserves grew by a further 600,000 ounces (18.7 tonnes) in December – the ninth successive month of gold reserve increases. Clearly President Putin is a believer in the ultimate economic benefits of a strong national gold holding – particularly if some kind of global reserve currency realignment lies ahead in the relatively near future.
As a Reuters report points out, Russia has now more than tripled its gold reserves in the past 10 years, even as it recently has presumably had to use some of its its international currency reserves to defend the ruble with the national economy having been driven to the brink of recession. The ruble slid almost 50 percent in the past 12 months which makes the nation’s gold reserves ever more important to its global economic status.
This very interesting commentary by Lawrie was also posted on this website yesterday---and it's worth reading as well.
Gold import in India has halted in recent days, with the market offering a widening discount over prices in London, now at $12-15 an ounce or Rs 240-300 per 10g.
When demand is good, importers charge a premium over London prices. With this not so, they would like to offload their stocks; holding the metal is costly. The present discounts are due to a huge carryover stock from imports in November, when 151 tonnes came in, far above India’s normal monthly demand.
Only 39 tonnes of gold was imported in December, when the marriage season had paused. The latter has restarted after January 14 but most of the buying was done when prices were lower in October-November. Now, demand is also absent as global prices have shot up to $1,300 an oz.
A person working closely with gold importing agencies said the high discounts had led to a halt in imports. The price in India is determined on the cost of imports and the margins in these are thin. The prevailing discount of one per cent makes these unviable. This month so far, only 15-20 tonnes might have come in.
This gold-related news story appeared on the business-standard.com Internet site at 1:21 p.m. IST on their Saturday afternoon---and it's courtesy of reader Danny Carroll.
While public companies can manipulate their per-share earnings with stock buyback programs and other tricks (like reducing their capital expenditure budgets), there is little companies can do to mask revenue growth.
For the fourth quarter of 2014, S&P 500 companies are expected to report a pathetic revenue growth of 1.1%—that’s 68% below the average revenue growth over the past three years of 3.5%. (Source: FactSet, January 9, 2015.) Weak revenue growth means companies are having a difficult time selling more goods or services to their customer or they are having troubles getting more customers. At the very core, poor revenue growth is a reflection of poor economic growth.
And we have seen more and more companies provide a negative outlook for their corporate earnings. So far, of the 108 companies on the S&P 500 that have provided an outlook, 81% of them have issued negative guidance—well above the five-year average of 68%. (Source: Ibid.)
Earnings growth expectations are collapsing, too. At the end of September 2014, analysts had expected the S&P 500 companies to show earnings growth of 8.4% in the fourth quarter of 2014. Now they expect this rate to be only 1.1%.
This article appeared on the economatter.com Internet site yesterday sometime---and I thank Dan Lazicki for today's first story.
The United States risks a deflationary spiral and a depression-trap that would engulf the world if the Federal Reserve tightens monetary policy too soon, a top panel of experts has warned.
"Deflation and secular stagnation are the threats of our time. The risks are enormously asymmetric," said Larry Summers, the former US Treasury Secretary.
"There is no confident basis for tightening. The Fed should not be fighting against inflation until it sees the whites of its eyes. That is a long way off," he said, speaking at the World Economic Forum in Davos.
Mr Summers said the world economy is entering treacherous waters as the U.S. expansion enters its seventh year, reaching the typical life-expectancy of recoveries. "Nobody over the last fifty years, not the IMF, not the US Treasury, has predicted any of the recessions a year in advance, never."
This Ambrose Evans-Pritchard offering, filed from Davos, was posted on The Telegraph's website at 12:44 p.m. GMT on Thursday afternoon---and it's courtesy of South African reader B.V.
The world today is in the hands of a set of quacks who pass themselves off as "Economists"; their pseudo-economic science is nothing but ancient superstition dressed in modern garb. Yesterday they sold us "Indulgences", today they sell State Bonds. The whole spectacle should be riotously funny except for the fact that these quacks and their coterie of flatterers who grant them awards, distinctions and Nobel Prizes have driven the world to the brink of destruction.
We behold a spectacle worthy of the satire of the great Erasmus of Rotterdam, who wrote his immortal "In Praise Folly" in 1511. His treatise became the world's first "Best Seller" - all literate Europe read it and laughed. Laughter is an enormously effective demolisher of pomposity, as the semiologist Humberto Eco pointed out in his book "The Name of the Rose".
Would that we had an Erasmus around , to make the world laugh itself silly at the antics of the quacks who pass themselves off as Economists, Central Bankers and Finance Ministers in the world today.
This very interesting essay by Hugo appeared on the plata.com.mx Internet site yesterday---and I found it embedded in a GATA release.
When it comes to bashing the Federal Reserve, Paul Singer is far from finished.
In November, Singer, who runs the hedge fund Elliott Management, said that that the U.S.’s economic recovery had basically been “faked” by the Federal Reserve’s stimulus efforts. He called the good economic numbers coming out “cooked.”
On Wednesday during a panel discussion at the World Economic Forum in Davos, Switzerland, Singer continued his attack on the Fed’s policies. He said that the Fed’s quantitative easing bond buying program has been the main driver of income inequality and is exacerbating social instability around the world.
“Inequality is a function of the government’s policies,” said Singer. “There is no question that QE is adding to it.”
Singer argued that any predictive power markets once had has been eroded by the Fed. “I would put ‘market’ in quotes,” said Singer. “You don’t know what the real price is. The market is determined by the Fed.”
This very worthwhile read, filed from Davos, appeared on the fortune.com Internet site at 2:25 p.m. EST on Wednesday---and I found it in yesterday's edition of the King Report.
We talk about the U.S. economy and its fundamentals, the Fed (“The Fed has the worst models. I’m not joking, they have the worst forecasting record of all time. Over the past five years they have been consistently wrong, by orders of magnitude.”) and what they’re most likely to do (or not do).
He discusses how the economy is really on a knife’s edge right now as the great battle—between natural forces that are pushing for deflation and central banks and governments that are pushing for inflation—plays out.
He shares his advice on what investors are supposed to do in this environment (hint: prepare for both and hold real assets).
We talk about oil prices and how the fallout from oil’s drop is likely to wipe out a significant part of the $10 trillion debt market related to oil. If the default rate hits only 10%, this means a trillion dollars is on the line. More than in the sub-prime crisis a few years ago.
This 25:49 minute audio interview with Jim, was hosted by Simon Black---and was posted on the sovereignman.com Internet site on Thursday sometime.
The first video interview was posted on the Bloomberg website yesterday---and it runs for 7:10 minutes. Jim and Bloomberg's Lisa Abramowicz discuss current global geopolitical risks---and it's headlined "Rickards: Poroshenko Should Not Be in Davos".
The second started off life on the Russia Today website---and is now on youtube.com. It's headlined "Canada's Currency War"---and the interview with Jim runs from the 3:45 minute mark, up until the 12:00 minute mark. The link is here.
Harold Jacobsen sent me the first interview---and reader "Harald" beat reader "Harold" by one minute on the Russia Today interview.
Sprott Money's Geoff Rutherford interviewed me four about four minutes on Monday afternoon---and here are the results. We discuss oil, the Swiss National Bank throwing in the towel on the euro peg---and gold.
Oil drillers will begin collapsing under the weight of lower crude prices during the second quarter and energy explorers who employ them will shortly follow, according to Conway Mackenzie Inc., the largest U.S. restructuring firm.
Companies that drill wells and manage fields on behalf of oil producers will be the first to fall after the benchmark American crude, West Texas Intermediate, lost 57 percent of its value in seven months, said John T. Young, whose firm led the city of Detroit through its 2013 bankruptcy.
Oil companies have slashed thousands of jobs, delayed billions of dollars in projects and dropped or scaled back expansion plans in response to the prolonged rout in crude prices. For oilfield service providers that test wells and line the holes with steel and cement, the impact of price reductions forced upon them by explorers will start to pinch hard during the second quarter, Young said Thursday.
“The second quarter is going to be devastating for the service companies,” Young said in a telephone interview from Houston. “There are certainly companies that are going to die.”
This Bloomberg article, filed from Chicago, showed up on their website at 2:39 p.m. Denver time Thursday afternoon---and it's another offering from Dan Lazicki.
The European Central Bank said on Thursday that it would begin buying hundreds of billions of euros worth of government bonds in an aggressive, though some say belated, attempt to prevent the eurozone from becoming trapped in long-term economic stagnation.
The bank’s president, Mario Draghi, said the central bank would begin buying bonds worth 60 billion euros, or about $69.7 billion, a month. That is more spending than the €50 billion a month that many analysts had been expecting.
The long-awaited program, known as quantitative easing, is meant to spur growth in the listless eurozone economy and to raise inflation to healthier levels. In December, inflation in the 19 countries of the eurozone fell below zero and raised the specter of deflation, a sustained decline in prices that can lead to higher unemployment and that is notoriously difficult to reverse.
As a further stimulus step, the European Central Bank also said on Thursday that it was cutting the interest rate it charges on loans to commercial banks, as long as the banks commit to lending that money to companies or individuals. The new rate would be 0.05 percent, down from 0.15 percent.
This New York York Times article, filed from Frankfurt, put in an appearance on their website yesterday morning sometime---and it's the first offering of the day from Roy Stephens.
There are a bunch of things in the ECB postmortem note just released by SocGen's Michel Martinez, reproduced below, but here are the punchlines.
First, on the impact of ECB Q.E. on the economy: "we argue ECB QE could be five times less efficient than in the US. In December, press reports suggested that the ECB had run studies suggesting that a €1000bn QE programme would only boost price levels by 0.2-0.8 after two years, five to nine times less efficient than the studies for the U.S. or the U.K. The impact on GDP is not provided, but it would be reasonable to assume the same impact as on inflation on a cumulative basis."
In other words, it will be an outright failure as it "tries" to boost inflation expectations and the European economy in its current format. That, as a reminder, is its stated purpose.
So what does SocGen suggest? "The potential amount of QE needed is €2-3 trillion! Hence for inflation to reach close to a 2.0% threshold medium term, the potential amount of asset purchases needed is €2-3 trillion, not a mere €1 trillion."
And since there is nowhere near enough bond supply in Europe, the ECB will have to proceed with monetizing [drum roll] stocks. "Should the ECB target such an expansion of its balance sheet, it would have to ease some conditions on its bond purchases (liquidity rule, quality...) or contemplate other asset classes- equity stocks, Real Estate Investment Trust-(REIT), Exchange-traded fund (ETF)...- as the BoJ previously."
This Zero Hedge commentary appeared on their Internet site at 3:27 p.m. yesterday afternoon---and it's the third offering of the day from Dan Lazicki.
Mario Draghi has achieved a spectacular triumph. His headline offering of €60bn (£45bn) a month in quantitative easing comes in the face of scorched-earth resistance from the German Bundesbank and the EMU creditor core. It is finally big enough to make an economic difference.
Yet today's shock-and-awe action by the European Central Bank (ECB) comes three years late, after the eurozone has already been allowed to drift into deflation, and very nearly into a triple-dip recession.
The fact that the ECB is having to act on this scale a full six years into the world's post-Lehman recovery is in itself an admission that policy has been horribly behind the curve. Mr Draghi told us year ago in Davos that warnings of deflation were jejune and that QE was out of the question.
His hands were tied, of course, whatever he really thought at the time. He could not move too far beyond the ECB's centre of gravity. He had to demonstrate that all else had failed, and all else did then fail.
This commentary by Ambrose Evans-Pritchard, who never met a money printing program he didn't like, was filed from Davos---and was posted on the telegraph.co.uk Internet site at 5:18 p.m. GMT yesterday afternoon. It's definitely worth reading---and I thank Roy Stephens for sending it along just after midnight.
"I think the presidents should be locked up in a room until they come up with a solution," says Serbia's President Tomislav Nikolic of the leaders of Russia and the European Union.
Serbia certainly has the credentials to act as honest broker in the dispute that has arisen over the conflict in Ukraine.
It has just completed its first year of formal negotiations to join the E.U. But it is maintaining its strong ties with Russia and refusing to implement sanctions, despite pressure from Brussels.
President Nikolic is well-known for his plain-speaking style, occasionally landing in diplomatic hot water as a result.
This BBC news item, filed from Belgrade, was posted on their website on Wednesday sometime---and it's another contribution from reader B.V.
Diplomats from Russia and Ukraine agreed Wednesday to pull back heavy weapons from an agreed demarcation line in accordance with the Minsk agreement of September, just hours after separatist forces deployed more arms to east Ukraine.
German Foreign Minister Frank-Walter Steinmeier, who hosted a meeting of his counterparts from Russia, Ukraine and France, said the four parties had agreed that the demarcation line defined in the Minsk agreement of September last year should form the basis for the withdrawal.
Under the plan, Ukraine and the pro-Russian separatists would pull back their heavy arms 15 kilometres (nine miles) on either side of the line, though there was no agreement on a withdrawal of all troops.
“Finally there was an agreement reached today that the demarcation line, mentioned in the Minsk protocol, will be the line from which the withdrawal of heavy weaponry should start now,” Steinmeier said late on Wednesday after talks in Berlin with his counterparts from France, Russia and Ukraine.
We've heard this all before, dear reader. Let's see if this 'agreement' works out differently. This longish news item appeared on the france24.com Internet site yesterday sometime---and my thanks go out to Roy Stephens for finding it for us.
The battle for control of Libya threatened to break open its central bank on Thursday as fighters with one of the country’s two warring factions seized control of its Benghazi branch, risking an armed scramble for its gold reserves that could cripple the last functioning institution in the country.
The Central Bank of Libya is the great prize at the center of the escalating armed conflicts that have consumed the country since the overthrow of Col. Muammar el-Qaddafi more than three years ago. It has also been the main shield preventing Libya’s descent into utter chaos and deprivation.
The central bank is the repository for Libya’s oil revenue and holds nearly $100 billion in foreign reserves. A desire for a share of that wealth has helped motivate the violent competition among an array of militias fighting for money and influence. They have carved the country into warring fiefs, destroyed its two largest airports, bombed and shelled civilian neighborhoods and burned down refineries and oil depots — driving the oil output that is the mainstay of Libya’s economy down to less than 250 barrels a day from as much as 1.7 million a day at its peak.
As a result, Libyans across the country endure electricity blackouts for hours a day, long lines for scarce fuel at gas stations, and shortages of cooking oil despite its vast energy resources.
This New York Times story, filed from Bayda, Libya, put in an appearance on their Internet site yesterday sometime---and it's definitely worth reading. I thank International Man senior editor Nick Giambruno for passing it around yesterday.
King Abdullah of Saudi Arabia, who came to the throne in old age and earned a reputation as a cautious reformer even as the Arab Spring revolts toppled heads of state and Islamic State militants threatened the Muslim establishment that he represented, died on Friday, according to a statement on state television. He was 90.
The Royal Court said in a statement broadcast across the kingdom that the king had died early Friday. The royal court did not disclose the exact cause of death. An announcement quoted by the official Saudi Press Agency said the king had a lung infection when he was admitted on Dec. 31 to a Riyadh hospital.
The king’s death adds yet another element of uncertainty in a region already overwhelmed by crises and as Saudi Arabia is itself in a struggle with Iran for regional dominance.
The royal family moved quickly to assure a smooth transition of power in a nation that is a close ally of the United States, the world’s largest exporter of oil and the religious center of the Islamic faith. In a televised statement, Abdullah’s brother, Crown Prince Salman, announced that the king had died and that he had assumed the throne.
This news item showed up on The New York Times website yesterday sometime---and it's courtesy of reader Gerold Becker. Manitoba reader U.M. sent around the Zero Hedge take on this story---and it's headlined "Saudi King Abdullah Has Died; Crude Prices Jump".
China is going to build a $242 billion (1.5 trillion yuan) high-speed rail link between Beijing and Moscow. The line will cut the journey time from five to 'two days', say Chinese authorities.
The railway will be 7,000 kilometers long and go through Kazakhstan, reports Bloomberg citing Beijing’s city government on the social networking site Weibo, China’s alternative to Twitter. The railway will make travel easier between Europe and Asia, the statement said.
China is actively promoting its high-speed railway technology and sees Russia as an especially attractive market because of its strained relations with Western countries over Ukraine.
In October 2014 Russia and China signed a memorandum of understanding over a high-speed railway connection. Russian Railways then reported that its purpose was to plan for a high-speed Moscow - Beijing Eurasian transport corridor.
This news story, filed from Moscow, was posted on the Russia Today website at 3:22 p.m. Moscow time on their Thursday afternoon, which was 7:22 a.m. in New York---and it's another offering from reader B.V., for which I thank him. The Zero Hedge take on this is provided by 'David in California'---and it's headlined "More Isolation? Russia, China To Build $240 Billion High-Speed Rail Link".
The JPM Natural Resources fund is looking to increase its position in gold, following ongoing concern for oil and copper prices.
Run by Neil Gregson and his commodities team, the £760m fund is trying to position itself in a market with “appalling sentiment”.
Portfolio manger James Sutton says: “We will be looking to increase our position in gold from 17 per cent to around 20 to 25 per cent.”
Drastic falls in the price of copper, together with a tumbling oil price has meant there is little room for error in the positioning of the portfolio, although fund manager Gregson remains confident oil prices will recover towards the end of 2015.
This interesting gold-related article put in an appearance on the British website fundweb.co.uk on Thursday sometime---and I thank Casey Research's own Jeff Clark for bringing it to our attention.
Could there be roots to one of the Civil War's most enduring mysteries in Muskegon, Michigan? That's what two local treasure hunters strongly believe and they have four years of research that they feel proves it.
Kevin Dykstra and Frederick J. Monroe were diving in northern Lake Michigan in 2011 and found the remains of a shipwreck, they believe, could be "Le Griffon," which sank in 1679. The funny thing is, the pair weren't searching for shipwrecks at the time of their 2011 find.
They were searching for a much bigger treasure -- lost Confederate gold from the Civil War.
Both Kevin and Frederick have decided to go public with their research, which reveals that West Michigan could be home to this 150-year old mystery.
This very interesting article, filed from Muskegon, Michigan, was posted on the wzzm13.com website sometime this year, but there's no dateline. This is another story I found over at the gata.org Internet site yesterday.
The financing window is open for Canadian gold miners, and they are rushing through it at a frantic pace before it shuts.
Six companies have announced bought deal offerings since Tuesday evening: Romarco Minerals Inc., Detour Gold Corp., Osisko Gold Royalties Ltd., Primero Mining Corp., Asanko Gold Inc., and Richmont Mines Corp. Between them, they are raising a whopping $789.8 million. Last week Yamana Gold Inc. unveiled a $260.2-million equity deal of its own, and Lydian International Ltd. tapped the market for $16.5 million.
The flood of financings coincides with a significant jump in the gold price that has reignited investor enthusiasm for the sector. Bullion is up almost 10 percent this month and topped US$1,300 an ounce on Wednesday for the first time since August.
This article appeared in Canada's National Post newspaper on Wednesday---and I found it on the gata.org Internet site yesterday.
GATA Chairman Bill Murphy and board member Ed Steer, interviewed by Vanessa Collette, discussed the prospects for the monetary metals last weekend at Cambridge House's Vancouver Resource Investment Conference.
The interview is 12 minutes long and can be seen at GoldSeek's companion site, SilverSeek.com. This interview, along with Chris Powell's introduction, was something I extracted from a GATA release yesterday. It's worth watching, at least in my opinion.
This brief, but interesting article put in an appearance on the World Gold Council Internet site [gold.org] on Thursday---and I thank Manitoba reader U.M. for her final contribution to today's column.
India needs to take a leaf out of Turkey's book, which has undertaken gold reforms that helped bring out "stocks under the pillow," to reduce imports and curb smuggling, the World Gold Council today said.
"This is the right time to bring in gold reforms in the country instead of putting on more curbs to curtail demand," the council's managing director for India, Somasundaram PR, said today, quoting the report, "Turkey: Gold In Action."
"This will help in bringing out 'stocks under the pillow' and hence increase recycling, which will help in reducing imports and smuggling," Somasundaram said.
Whenever the people of India hear the World Gold Council talking about mobilizing their privately owned gold, they should hang onto it even more tightly than they already are. This is another story from the World Gold Council's website yesterday---and I found it embedded in another GATA release.
Goldbroker.com's Dan Popescu has interviewed your secretary/treasurer about the refusal of mainstream news organizations and financial market leaders to examine and respond to the documentation of the longstanding Western central bank policy of gold price suppression. Also discussed in the interview are:
-- Attempts to discourage examination of the policy of gold price suppression by disparaging the issue as mere "conspiracy theory."
-- The "conspiracy facts" of secret meetings of government officials to develop and implement policies of secret intervention in the gold market.
-- The remarkable admission recently obtained by Goldbroker.com founder Fabrice Drouin Ristori from the Banque de France's director of market operations, Alexandre Gautier.
The interview is 17 minutes long and is another gold-related news item I found on the gata.org Internet site.